Estimating the Base of the Value-Added Tax (VAT) in Developing Countries: The Problem of Exemptions
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
Developing countries with VATs typically exempt a large number of goods and services. Following a brief discussion of the rationale for exemptions, this paper presents a formula for the base of a VAT with exemptions. Two basic adjustments must be made to the base without exemptions: subtraction of the value of sales to consumers of exempt industries and addition of intermediate sales of taxable inputs to exempt industries. The paper concludes with a derivation of the elasticity of a VAT with exemptions with respect to aggregate consumption and a discussion of the implications of technological change for the VAT base.
Series:
Working Paper No. 1991/021
Subject:
Consumption Consumption taxes Effective tax rate National accounts Tax policy Taxes Value-added tax VAT exemptions
English
Publication Date:
February 1, 1991
ISBN/ISSN:
9781451921465/1018-5941
Stock No:
WPIEA0211991
Pages:
18
Please address any questions about this title to publications@imf.org